Gunther Thumann Chairman “I am delighted to have completed my first full year as Chairman of Jersey Finance in 2018. It has been a busy and positive year for Jersey’s finance industry.

2018 saw us work closely with members and other stakeholders, both here and abroad, to respond to important government consultations. We helped shape UK legislation through Jersey’s industry response on the Non-Resident Capital Gains Tax proposals supporting the delivery of a positive outcome by protecting the investment returns of exempt investors and preserving Jersey’s position as a centre of excellence for real estate funds.

“Jersey Finance and its members were also instrumental in moving forward the legal framework in Jersey for LLCs and LLPs, as well as in the delivery of innovations such as the company demerger regulations. By coordinating industry feedback on the draft Taxation Law on Company ‘Substance’ measures, we helped Jersey to address recommendations from the EU’s Code of Conduct Group.

“And towards the end of 2018, we were also pleased to see the fruits of the steps we took as a jurisdiction to bring an innovative new International Savings Plan product to market. This sets us up to meet the needs of multi-national businesses, particularly in the Gulf region.

“We also took a positive approach to our research programme which focussed on setting Jersey apart from other international finance centres. Seven new reports were added to our library of evidence-based research and independent insights throughout the year, including the Future of International Finance Centres white paper on Asia’s wealth management market, a GCC-focussed white paper on wealth structuring and IFCs , thought-leadership work on innovation, debt funds, impact investing and next generation wealth. By delivering these insights, we have made Jersey’s proposition clear and the positive impact it makes in both local and global economies.

I look forward to working with the board to build on these efforts, for our members and clients, in 2019.”

2. Chief Executive Officer's Statement

Geoff Cook CEO "2018 has proved to be another year of significant change with geopolitics continuing to provide an interesting backdrop while closer to home we’ve experienced a sizeable shift in our own political landscape following the elections in May.

Our industry, however, has remained on a firm footing throughout because of the forward-focussed strategic vision shown by the sector, government and regulator.

For instance, over the past 12 months we’ve been successful in developing fresh products, launched our new verbal strategy, which underpins how we communicate with our diverse audiences, and made real progress in the digital space through supporting initiatives such as Digital Jersey’s first ever Techweek and FinTech Day.

We’ve continued to publish vital evidence-based research and to build our profile in overseas markets, rolling out an extensive events programme. We also became the first IFC to open an office in the Dubai International Finance Centre and have plans to establish a representative office in New York next year.

And we’ve upped our local engagement – launching our Future Connect programme, to reach out to the more junior segment of our workforce, as well as focussed on engaging with young people generally through our Life in Finance programme and Finance Fayre.

The results of this activity are clear to see – today, our overall workforce is almost as big as it’s ever been, our funds sector is at an all-time high, our banking sector is impressively resilient, our trust and company administration sector is reporting stellar growth, and around 50% of new business attracted to Jersey now comes from outside Europe and the UK.

As we look forward to 2019, we should be confident about our future as a progressive finance centre, but not complacent. On its own, the fallout of Brexit will be complex, whilst economic market cycles, social unrest around the world, and digital disruption will all pose challenges too.

As an industry, we can mitigate those challenges by providing innovative, intuitive products, continuing to harness global links, offering a strong and nimble regulatory framework, and by leading the way for digital and physical infrastructure. In 2019, for instance, expect to see more in the digital space and Jersey capitalise on its growing international reputation – a new office in New York, for instance, will enhance our pan-Atlantic links.

One of our greatest assets, though, is our people, and I know that the quality of the expertise we have in Jersey will put us in a fantastic position as we ready ourselves both for the challenges and opportunities that come our way in the coming 12 months, enabling Jersey to continue to differentiate itself on the global stage.

Undoubtedly, there will be challenges but I am certain that our approach will continue to serve us well as we go into 2019, and while I will no longer be at the helm of Jersey Finance, I have every confidence that by working together as an industry we will keep on thriving.”

3. Market Development

Markets Market Development

Jersey’s forward-thinking approach has continued to stand the Island in good stead with regards to our main sectors as well as an in the digital space with the support of Digital Jersey’s first ever ‘Tech Week’ and ‘Fintech Day’.

Jersey continued to position itself as the ‘no change’ jurisdiction in the face of Brexit. This was especially so with regards to our alternative funds sector, which has seen substantial growth in 2018. Meanwhile our flagship conferences saw unprecedented attendance with more than 700 attendees across both days.

Record numbers of delegates attended our roadshow events in South Africa, demonstrating the growing demand for infrastructure investment and increasing sophistication of African investors. This is likely to bring Jersey’s relevance to the continent sharply into focus. We also supported a number of high-profile events, including SuperReturn and the 4th Annual Private Equity in East Africa conference.

2018 saw a new chapter for Jersey through the issuance of a Dubai International Financial Centre license, creating an even stronger advantage against competing IFCs. A further milestone was marked with our ‘Women in Wealth’ series, which resulted in wide positive Arabic media coverage. Furthermore, a white paper, which uncovered attitudes towards wealth structuring and IFCs in the region, including that 92% of respondents believed clients were poorly prepared for the transition of wealth across generations was produced. With approximately US$1 trn in wealth set to transition between generations, there is clearly a real opportunity for Jersey in the region.

4. Sectors: Banking

Banking While the Island has been impacted by consolidation and restructuring in the banking sector globally, Jersey's banking industry has remained markedly resilient with banking deposits on the rise

We continue to house the headquarters of a number of international banking organisations and to focus on the vital recommendations stemming from the ‘Future of Banking’ report.

28

banking licences

£121.4bn

in banking deposits (As at 30 September, JFSC)

13,200+

highly skilled and experienced financial professionals

Diverse

international representation including UK, US, Africa and the GCC

5. Sectors: Funds

Sector Activities Funds: The value of Jersey's funds industry reached a record high in 2018

while our forward-thinking approach to developing transformative new products has led to the introduction of LLPs with work well underway to make LLCs available. Private equity continued to be a clear performer – up more than 40% since last year – while the Jersey Private Fund reached the 192 mark.

£301.7bn

Net Asset Value (as at 30 September, JFSC)

260

Jersey fund promoters (Monterey Jersey Fund Report, 2018)

£24.8bn

total fund under investment management (as at 30 September, JFSC)

192

Jersey Private Funds authorised (as at 30 November, JFSC)

Sectors: Private Wealth

Sector Activity Private Wealth: Jersey's private wealth sector continued to evolve its proposition in 2018 by delivering innovations, enhancing its international profile and emphasising its focus on quality.

375

Jersey foundations formed since their creation in 2009 (as at December 2018, JFSC)

STEP

Still one of the largest branches of the Society of Trust and Estate Practitioners (STEP), globally

181

regulated trust company business (as at September 2018, JFSC)

Delivery

Working with member firms we deliver Put Simply: Private Wealth

7. Sectors: Capital Markets

Sector Activity Capital Markets: in 2018, Jersey continues to be the clear choice for companies seeking to list,

with the greatest number of FTSE 100 companies and AIM companies registered outside the UK. The Island is home to companies listed on stock exchanges in London, Hong Kong, Toronto and New York.

Marketing and Communications Innovations in our events programme, on digital platforms and through PR opportunities

led to a record-breaking year for marketing and communications outputs.

3,664

attendees at Jersey Finance events

14%

increase in overall attendance at Jersey Finance events

20%

increase in total number of visitors to Jersey Finance's website in 2018

162%

increase in publication and research paper downloads

10. Member and Gatekeeper Feedback

Member and Gatekeeper Feedback Once again, Members rated Jersey Finance highly for its performance in reputation management and the promotion of Jersey’s finance industry

while gatekeepers said Jersey’s top three attributes were: a mature and sophisticated legal framework; a positive reputation of the centre; and good quality of professional service providers.

97%

of Members and 84% of gatekeepers speak highly of Jersey Finance

98%

of our Members and 72% of gatekeepers know Jersey Finance 'very well' or 'fairly well'

33%

of respondents reported a rise in client use of Jersey in the last 12 months

“They are really proactive. They are good with thought leadership. they do spotlight on and articles. They have high visibility and are at most industry events, often presenting.”

“I think they do a great job promoting the finance industry in the island. Very proactive. They have good individuals. They do a good job at getting the right messages out. They aren’t there just to protect our reputation. They do a good job at promoting the business development sector.”

11. Education and Employment

Education and Employment Career opportunities were shared at events including the Jersey Skills Show, Highlands Freshers fayre and school workshops

while a new careers video, highlighting the exciting opportunities available in the finance industry, was launched. Meanwhile employment figures in the finance sector continued to grow.

36

6th formers on work placements with 25 of our Member firms in our 2018 Life in Finance scheme

170+

Islanders joined us at our first-event Careers in Finance fayre

49%

of finance industry employers forecast a growth in their headcount in the next 12 months

12. Tax and Transparency

Tax and Transparency Transparency and tax remain a significant consideration for Jersey Finance and we continue to work closely with the government and regulator

to ensure an appropriate approach to relevant legislation and regulation.

38

tax information exchange agreements

13

double taxation agreements

Developments of note in 2018 included the March launch of the National Risk Assessment of Money Laundering and Terrorist Financing (NRA). The Jersey Financial Services Commission (JFSC) has completed Phase I and II data collection for AML/CFT risk-based supervision from industry. The NRA process will lead to a published report, which will inform policy decision-making and identify remedial action such as legislation amendments or resource allocation. The first draft of the NRA report is expected to be provided to the World Bank after March 2019.

Towards the latter half of the year, the States Assembly passed the Taxation (Companies – Economic Substance) Law, which looks to meet the requirements of the EU Code of Conduct Group (Business Taxation) (COCG) in respect of economic substance. In developing the Draft Law and Jersey’s response to concerns raised by the COCG, the Government of Jersey has closely engaged with a number of jurisdictions and organisations (including the COCG, the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes, the Inclusive Framework on BEPS, the OECD’s Forum on Harmful Tax Practices, individual EU member states, and the Crown Dependencies).

We also welcomed the release of the Technical Note, and associated clauses within the draft Finance (No. 3) Bill, setting out the provisions for non-resident collective investment vehicles (CIVs) investing in UK property. These measures form part of the UK’s wider policy to extend the capital gains tax (CGT) regime to non-residents holding UK property and are the result of a period of collaborative consultation between HM Revenue & Customs, HM Treasury and industry stakeholders, including Jersey Finance and its Members.

Central to these provisions for CIVs is the creation of two new elective regimes, a transparency election and an exemption election. These are designed to address industry concerns, by providing a means of preventing CGT being imposed at multiple levels within investment structures or indirectly imposed on tax-exempt investors (such as pension funds) who hold UK property through CIVs. We believe that these elections will help to achieve a level playing field in which investors remain free to choose to structure their UK property holdings through Jersey, taking advantage of our Island’s expertise, proportionate regulatory framework and flexible vehicles.

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